Tax Compliance launches a series of materials dedicated to the taxation of cryptocurrency transactions. The first aspect is the taxation of digital currency transactions with personal income tax.

Recent regulatory changes related to the regulation of mining activities and the establishment of an experimental legal regime for digital currencies indicate that the Russian cryptocurrency market is gradually coming out of the shadows. In this regard, the issues of taxation of transactions with digital currencies are becoming increasingly relevant.

Until recently, Russian tax legislation actually lacked a procedure for taxation of income received by individuals from digital currency transactions. Several times there were legislative initiatives aimed at closing this gap, but they were not supported by the Government and the State Duma. This may be due to the fact that the state authorities were betting on the development of the digital ruble, which was supposed to compete with private cryptocurrencies.

At the same time, the absence of a statutory taxation procedure did not mean that there was no taxation at all. Tax legislation provides for a rather broad definition of income, which is defined as “economic benefit in cash or in kind, taken into account if it can be assessed and to the extent that such benefit can be assessed” (Article 41 of the Tax Code of the Russian Federation). The inspectors used this concept in order to justify the need to impose personal income tax on income arising from transactions involving cryptocurrency. In practice, the tax service detected such transactions on the basis of an analysis of cash flow in citizens' bank accounts and demanded personal income tax on the income from the transactions. At the same time, the Ministry of Finance of Russia allowed to take into account documented expenses for the acquisition of digital currency for such transactions (Letter of the Ministry of Finance of Russia dated 17.05.2018 No. 03-04-07/33234). This procedure was worked out by the financial department in order to achieve at least some certainty in terms of taxation. 

In 2024, large-scale amendments to tax legislation were adopted, which established the tax treatment of various transactions with digital currency. 

The procedure for imposing personal income tax on transactions with cryptocurrency from 2025

The table below compares the PIT tax treatment of income from digital currency transactions that existed prior to 2025 with that established by the 2024 amendments. 

Procedure for the imposition of personal income tax on transactions involving cryptocurrency from 2025

The table below compares the PIT tax treatment of income from transactions with digital currency that existed before 2025 with that established by the amendments introduced in 2024.

Conclusions and implications 

We believe that the direct enshrinement in tax legislation of the procedure for imposing personal income tax on transactions with digital currency will have a positive impact on the legitimate expectations of the subjects of the crypto market. At the same time, it can be assumed that the amendments will increase the intensity of control measures on the part of tax authorities. Such a forecast generally correlates with the trend of increasing attention to the taxation of individuals on the part of inspectors. In this regard, it is advisable for citizens carrying out investment transactions with digital currency to take into account the legislative innovations and collect documentary evidence of expenses aimed at the acquisition of digital currency. This will reduce the personal income tax burden and avoid possible claims from the tax authorities.